"Views of the videos increased since they started giving "official badge" to user created videos in June, 2008. Total views of the videos during the period 2008/9-2008/11 is over 50,000,000times. However, in terms of ad revenue, the increase seems to have been due to the launch of inVideoAd in October, 2008.

It is said that most video services are having difficulty with monetization, but Kadokawa has shown a good example of how involving user created videos helps their total views and ad revenues."

2) Other companies are following Kadokawa

According to this blog post, this blogger uploaded a video (opening video of an animation called Shikabane-hime) to YouTube without permission from the original content holder. He received an email from YouTube that the video is infringing the rights of the rights holder (Funimation Entertainment), but that Funimation Entertainment is not claiming for take down, and also that there will be ads displayed on this video.

Funimation has their YouTube channel here, and has video contents of certain animations including Shikabane-Hime with English subtitles, however they have area restrictions and we cannot view this from Japan. The blogger's video that got the permission this time on other hand has no area restriction.

It looks like Funimation has not yet stepped into allowing user generated MAD animations... at least not yet.

I think monetization of video contents / user generated contents is a very interesting issue to keep an eye on.